According to the U.S. National Home Price Index, home costs increased by 18.8 percent in 2021, the largest increase in 34 years of data and a significant increase above the 10.4 percent increase recorded in 2020.
Price increases were seen in all regions last year, although the South and the Southeast had the largest increases, with each region seeing a rise of more than 25%.
According to the index, Phoenix, Tampa, and Miami had the largest annual growth of the 20 cities in December.
Phoenix was the most expensive city for the 31st consecutive month, with 32.5 percent more than the previous year. Tampa was next with a 29.4 percent increase, followed by Miami, with a 27.3 percent increase.
We continue to see extremely strong growth at the municipal level,” said Craig J. Lazzara of S&P Dow Jones Indices, who is also the managing director of the index company. “Price increases were seen in all 20 cities in 2021, and prices in all 20 cities are at or near all-time highs.”
According to Lazzara, during the previous several months, property prices have risen at extremely fast but decelerating rates, with the rate of increase slowing down. However, this slowing came to a halt in December.
After reaching a high of 19.8 percent in August, the yearly increase in price fell through the fall to 18.8 percent in November, where it remained in December, according to the Bureau of Labor Statistics.
After accounting for seasonal variation, home prices in the United States National Index, which includes all nine U.S. Census divisions, climbed 1.3 percent from November to December.
During the epidemic, according to Lazzara, the strength of the U.S. property market was being fueled in part by Americans who decided to relocate.
Recent data from the National Association of Realtors indicates that a persistently low number of homes has plunged to record low levels in December.
Prices were forced higher due to the sustained high level of demand. A long-running scarcity, coupled with the epidemic’s effects, implies that it will take years to meet the demand for newly built dwellings shortly.
Nevertheless, according to Lazarra, increasing mortgage rates may begin to cool some of the desire for new homes. “In the short run, we should begin to see the impact of rising mortgage rates on home values quite soon,” says the author.
According to the Federal Reserve, mortgage interest rates, rising slowly since August, began to rise quickly in late December and have now risen to about 4 percent for a 30-year fixed-rate mortgage.
“Rising mortgage interest rates are reducing the purchasing power of homebuyers, which might signal a significant shift in the economy,” stated Danielle Hale, chief economist at Realtor.com.
From December 2020, when mortgage interest rates were at all-time lows, rising mortgage rates have contributed more than $200 to the monthly price of a median for-sale property, according to Freddie Mac. Approximately half of this rise, according to Hale, has occurred in the last eight weeks alone.
“With home prices set to rise in the next years, albeit at a reduced rate, affordability will become increasingly difficult for buyers in 2022, as a decade-long underbuilding tendency has left the real estate market 5.8 million houses short of meeting household growth,” Hale stated.
While at the same time, we anticipate that widespread trends such as flexible schedules and competitive labor market circumstances will provide workers with the wage boost and expanded search areas they require to negotiate a still-challenging home market.
The influence of housing affordability on families
A family’s well-being is dependent on having an affordable, high-quality house that meets their physical, mental, financial, and developmental needs.
The fact that housing prices for rental and ownership continue to outpace salary growth in the United States means that families often find themselves struggling in other aspects of their lives as fundamental requirements become increasingly competitive with one another. Nutrition, teaching, transportation, kid care, and health care are important considerations.
For example, a single mom earning the least wage who spends most of her pretax earning on the home has just $124 per week, or $17 per day, leftover to spend on all other requirements, such as food. In 2015, a tenant pressured by costs had less than $10 in savings.
Homes that find themselves in this scenario will be unable to save money and have difficulty recovering from unforeseen life events like losing a job, caring for a sick family member, or recovering from a car accident.
Bringing housing prices down to a reasonable level, on the other hand, can make all the difference in one’s life and one’s future.
Economic opportunity: Finishing the cycle
In the words of Sarah Mickelson, senior director of public policy at the National Low Income Housing Coalition, “addressing housing affordability is the most cost-effective approach of lifting individuals out of poverty, lowering children poverty, and promoting economic mobility.”
Because housing is the most expensive monthly expense for most families, according to Mickelson, “addressing affordability might result in significant shifts.”
When a home is reasonable, and there is enough money left over for things like transportation and child care, it can open the door to many educational and employment prospects for the family.
Affordability has “widespread and long-term consequences,” according to Michael Mickelson. “People who live in affordable housing earn more throughout their lives, live longer lives, and their children perform better in school.”
According to her, these results serve to alleviate existing poverty, but they can also help break the cycle of intergenerational poverty that unstable and overpriced housing can create.
Health: Analyzed by zip code
“If your housing is unaffordable, you will be forced to make trade-offs, which will be difficult. We are well aware that the stress associated with those trade-offs is poisonous for parents.
It is hazardous to children’s health. “Dr. Megan Sandel, an associate professor of pediatrics and environmental health at Boston University, explains how this works.
According to her, stress can present itself in mental and physical health difficulties resulting from the situation.
In terms of high blood pressure, insulin, cardiovascular disease, melancholy, and other mental health illnesses, “having to make those compromises or worrying about affording next month’s rent might have significant consequences.”
Previously cost-burdened families that are no longer forced to bear oppressive monthly housing costs can afford more preventive services and spend less on expensive emergency medical treatment in the future.
Furthermore, leaving behind the stress of exorbitant rent or inadequate living circumstances might enhance the health of families who are no longer in that situation.
Stability: Child growth and education
According to research, children who live in low-quality housing are more likely to experience emotional and behavioral problems in the future. Kids whose families move around a lot also tend to do poorly on tests and overall lower academic success.
In the words of Jonathan Reckford, CEO of Habitat for Humanity International, “the results reveal that home stability is such a critical driver for children’s growth and educational success.”
“There is a significant psychological benefit to living in decent conditions. Children are welcome to bring their friends over. They are no longer embarrassed by their surroundings.”
A better future
Putting up a home with Black Hills Habitat for Humanity will be the first move toward removing the hurdles that insecure and economical housing can generate in Valeria’s life.
The first four months after she and her family relocated to Rapid City, South Dakota, they were homeless and camped out on couches for four months.
She worked for the state did not prevent her from fulfilling the minimum wage criteria for most apartments. The racial discrimination exacerbated this situation she faced as a member of the Yankton Sioux Tribe.
That was a major source of worry for her, and she says because she couldn’t retreat to a secure haven that she knew was hers.
Her ability to pursue her Ph.D. while still working a meaningful job as a university advisor that pays more has enabled her to begin the process of breaking free from the cycle of poverty in which she was born and raised.
In the event that something went wrong, she says, she could use the money to pay off her college bills, buy more food for her family, or keep the $250 in her savings account.
There is a noticeable difference. “I can already feel it in my bones,” she says. “This home is preparing our children for a brighter future than I was able to provide for myself.”
According to Valeria, activism is the key to ensuring that more families like hers have access to affordable housing options.
Advocacy, she explains, is “having a voice for others while encouraging them to exercise their voice and tell their story.” “We’re attempting to make it easier for average folks to flourish in this economy by providing them with safe, affordable housing. By sharing our experiences, we bring the topic to life.”